Bonnyman Says Gov. Bredesen’s Efforts To "Fix" TennCare
Have Led To Largest Increase In Uninsured In History

Bethesda, MD -- The demise of TennCare, Tennessee’s controversial Medicaid waiver expansion program, stems from the failures of the state’s political leadership, not from flaws in TennCare itself. That’s the case made by Gordon Bonnyman, director of the Tennessee Justice Center, in an interview published today as a Health Affairs Web Exclusive.

Bonnyman disputes the view -- espoused by Tennessee’s Gov. Philip Bredesen (R) and articulated by BlueCross BlueShield (BCBS) of Tennessee CEO Vicky Gregg in a 29 November 2005 Health Affairs Web Exclusive interview -- that TennCare as designed was simply unaffordable. “TennCare failed not because the original design and operations were flawed -- they were successful -- but because political decisions made by the state ultimately made it unsustainable,” he declares.

Bonnyman was a key player in the 1994 launch of TennCare, which sought to cover many of the state’s uninsured residents using redirected hospital payments and savings from introducing capitation and managed care into the state’s Medicaid program. Through political action and litigation, Bonnyman has fought state attempts to trim the program, but he now says that TennCare exists in name only. “The hallmarks of TennCare were wall-to-wall capitated managed care and coverage expansion to a broad population of uninsured Tennesseans. Both of those are now gone,” Bonnyman tells Virginia Commonwealth University associate professor Robert Hurley.

Bonnyman: Gov. Sunquist Used TennCare As Scapegoat To Justify State Income Tax

“Although TennCare collapsed, it is key to make a distinction between policy failure and political failure,” Bonnyman emphasizes. “As a policy initiative,” in terms of saving money, reducing the ranks of the uninsured, and affecting health outcomes, TennCare “exceeded expectations.” According to Bonnyman, TennCare’s political downfall began in 2000 when outgoing Governor Don Sunquist (R), seeking to justify introducing a state income tax, seized upon the failure of TennCare’s second-largest plan to falsely argue that TennCare was out of control. This made the program the object of anti-tax wrath: “TennCare was like the guy standing on the curb minding his own business, being crushed against a lamp post by an errant drunk driver.”

Hurley notes that many observers were skeptical that Tennessee could reap substantial savings from managed care, since the state, with little HMO penetration, “had no experienced managed care organizations with which to contract.” Bonnyman responds that, initially, “what we got was very crude utilization management in big-ticket items like hospitals, which picked the low-hanging fruit quickly and effectively. … I believe that the expectation that we could get real managed care was a rational one, especially if plans would begin to mature over time.” But, by relieving TennCare plans of risk, allowing them to provide administrative services only, “state government made it easier for plans to make money the old-fashioned way, looting the public fisc rather than working for efficiency.”

State Took Back Risk Even Though BCBS Was Making Money, Says Bonnyman

Hurley asks, “Wouldn’t you expect the state to have to take back risk if it had plans going belly-up?” Bonnyman answers: “Blue Cross should have been the canary in the coal mine if plans were being underpaid, but their filings showed that they were making money in TennCare while losing money in their commercial HMO.” Other TennCare plans had trouble, Bonnyman says, not because TennCare underpaid, but because they were undercapitalized start-ups invited into the program only in an ill-advised attempt to prevent BCBS of Tennessee from having a monopoly. “In December 1993, all it took to start a TennCare plan was a leased BMW, a cell phone, and a silver tongue,” says Bonnyman. “The state was infamous for inept regulation of risk-bearing entities, including TennCare plans. Major failures were inevitable.”

Bonnyman says that Gov. Bredesen, a former managed care executive, is too caught up in bottom-line thinking. Bredesen “told me just as he entered office that he wanted to get his arms around TennCare and hold its growth to the rate of revenue growth in the state,” Bonnyman says. “I told him, if you could do that, you should get your plan patented, because this is the problem every other governor in the country has had with Medicaid in the past thirty years: Medical costs are outstripping everything else. The only thing you can really do, since you cannot control this cost trend, is to temporize and try to shift costs any way you can to the federal government.”

But Bredesen said that he wouldn’t settle for that, Bonnyman says, and the governor “set out to ‘tame’ and ‘fix’ TennCare.” Bonnyman continues, “You can see what he’s done just this year: We have seen the largest single increase in the number of uninsured Americans in the nation’s history; the largest single reduction in public funding for health services in the country; and, according to the University of Tennessee Medical Center researchers, we will see quantifiable increases in mortality in the state because of these developments.”

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.